Economics for the People and Live From Channel Zero!

We took a look this week at recent claims that president Obama has been both good (and bad) for the economy and asked economists Dean Baker of the Center for Economic Policy and Research and Jeanette Huezo of United for a Fair Economy, “what does this mean for Black people, Brown people and working people?” We then reconnected with author and journalist Ericka Blount Danois for another edition of Live From Channel Zero!

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1 Comment

Nixakliel
on September 14, 2014 at 12:48 am

When GDP shrinks, especially sharply, it is almost always BAD for workers, but GDP growth ain’t necessarily good for workers.
From 2000 to 2010 US GDP grew 1.626 Xs [1.3Xs adjusted for inflation] while the US population increased 1.1Xs. Thus adjusted for inflation US GDP rose 1.186Xs faster than the population. Yet in 2000 US unemployment was 4% compared to 9.6% in 2010 an increase in unemployment of 2.4Xs. In 2000 the minimum wage was $5.15/hr compared to $7.25/hr in 2010, yet if you multiply 5.15 by the increase in GDP from 2000 to 2010 [= 1.625], the min wage should have been $8.37/hr [note the min wage is still $7.25/hr in 2014].

Even more telling- In 1950 – 51 the US min wage was $0.75/hr & unemployment was 4.1%.. In 2000 the US min wage was $5.15/hr & unemployment was 4%. But US GDP grew 28.64Xs vs a US population increase [from 1950 – 2000] of 1.86Xs [FYI: inflation adjusted GDP grew 2.33Xs faster than US population from 1950 to 2000]. If you multiply $0.75 by 28.64 = the min wage should have been $21.48/hr had it kept pace w the rise in GDP- yet $5.15/hr is shy of 1/4th of that. If you divide 21.50 by 2 = $10.75/hr or by 3 = $7.16/hr which is $2/hr more than what the yr 2000’s min wage actually was at $5.15/hr.
Further in 1950 the aver wage was $1/hr which had it kept pace w GDP would have been $28.64/hr in 2000, yet aver wages in 2000 was only $11/hr. Had min wage kept pace w GDP from 1950 to 2010 it should have been $34.93/hr NOT $7.25/hr. Half of 34.93 = $17.47/hr or 1/3rd of 34.93 = $11.64/hr- vs just $7.25/hr [again even had the min wage from 2000 to 2010 kept-up w GDP it would have been $8.37/hr]. Obviously the minimum wage is just barely keeping pace w inflation &/or inflation adjusted GDP- It’s not pegged to absolute GDP growth at all. So if workers are not benefiting from GDP growth by increasing salaries [IE: increase in the min wage] nor increased employment [unemployment increased 2.4 Xs from 2000 to 2010 even as inflation adjusted GDP rose 1.3Xs = 1.186Xs more than the increase in US population]- who’s realling benefiting? Obviously if aver CEO salary went from 30Xs that of the aver worker in 1980 to now its 300Xs that of the aver worker [aka the 99%], then it must be the corp elites & others in the 1%.
Thus the min wage should indeed be at-least between $12 – $17/hr & unemployment less than 5% [likely as low as 2%] vs $7.25/hr & unemployment of 7.5% – 8%. Thus the min wage should NOT just be pegged to inflation, but also to average CEO salary along w increases in GDP, worker productivity & cost of living. Otherwise there’s NO real reason for workers to ‘celebrate’ GDP growth, if they do NOT even benefit from it.